What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-07 · 235 added, 202 removed, 438 unchanged (50% of the section changed)

50 unchanged sentences

ability to successfully recruit and retain qualified personnel;

impact of industry regulation, including regulation of privacy and digital healthcare;

impact of industry regulation, including regulation of compounded medications, privacy and digital healthcare;

economic and business conditions, including inflation, slower growth or recession;

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During April 2023, we launched a highly successful and differentiated GLP-1 Weight Management offering driven by our

existing primary care capabilities that already had more than 60,000 patient subscribers as of June 30, 2024.

Patients receive a range

of weight loss services including prescriptions for GLP-1 medications, as medically appropriate, lab work services, general primary care

and holistic healthcare and coaching.

existing primary care capabilities that already had more than 71,000 patient subscribers as of September 30, 2024.

Patients receive a

range of weight loss services including prescriptions for GLP-1 medications, as medically appropriate, lab work services, general primary

care and holistic healthcare and coaching.

The GLP-1 medically supported weight loss market is rapidly growing and is projected to increase

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Morgan Research.

telehealth revenue increased 60% for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Total revenue

from recurring subscriptions is approximately 97%.

In addition to our telehealth business, we own 73.32% of WorkSimpli, which operates

PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents.

WorkSimpli recurring

revenue is 100%.

telehealth revenue increased 62% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Total revenue from recurring subscriptions is approximately 92%.

In addition to our telehealth business, we own 73.32% of WorkSimpli,

which operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents.

WorkSimpli revenue from recurring subscriptions is 100%.

Platform and Business Strategy

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Since inception,

our Weight Management program has grown exponentially to over 60,000 patient subscribers as of June 30, 2024.

our Weight Management program has grown exponentially to over 71,000 patient subscribers as of September 30, 2024.

We remain at the forefront

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comprehensive offering.

In September 2024, we expanded our Weight Management program with an alternative designed for patients who are

unable or unwilling to use GLP-1 medications.

This treatment plan consists of three oral medications – metformin, bupropion, and

Direct-to-Patient

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December 11, 2023, the Company entered into a collaboration with Medifast, Inc.

with certain of its wholly-owned subsidiaries (“Medifast”).

Medifast will utilize

the Company’s virtual care technology platform to provide its clients access to a clinically

supported weight management program, including GLP-1 medications, which are a class of medications

that mainly help manage blood sugar (glucose) levels in people with Type 2 diabetes but can

also treat obesity.

Pursuant to certain agreements between the parties, Medifast has agreed

to pay to the Company the amount of $10 million to support the collaboration, funding enhancements

to the Company platform, operations and supporting infrastructure, of which $5 million was

paid at the closing on December 12, 2023, $2.5 million was paid during the three months ended

March 31, 2024, and the remainder $2.5 million was paid during the three months ended June

through and with certain of its wholly-owned subsidiaries

(“Medifast”).

Medifast will utilize the Company’s virtual care technology platform to provide its clients access to

a clinically supported weight management program, including GLP-1 medications, which are a class of medications that mainly help manage

blood sugar (glucose) levels in people with Type 2 diabetes but can also treat obesity.

Pursuant to certain agreements between the parties,

Medifast has agreed to pay to the Company the amount of $10 million to support the collaboration, funding enhancements to the Company

platform, operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was

paid during the three months ended March 31, 2024, and the remaining $2.5 million was paid during the three months ended June 30, 2024

(the “Medifast Collaboration”).

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with the ongoing collaboration, to appoint one non-voting observer to the Board of Directors of the Company, entitled to attend Board

Manufacturing

and Supply Chain

use third parties to manufacture and package our OTC products according to the formulas and packaging guidelines we dictate.

to minimize costs, we may elect to purchase raw or bulk materials directly from our suppliers and have them shipped to our manufacturers

so that we may incur only tableting, encapsulating, and/or packaging costs and avoid the additional costs associated with purchasing

the finished product.

potential restrictions on compounding of GLP-1s, including removal of tirzepatide (marketed as Mounjaro® and Zepbound®) and/or

semaglutide (marketed as Ozempic® and Wegovy®) from the drug shortage list, have the potential to disrupt patient treatment continuity,

by limiting our ability to provide personalized treatment plans that meet individual patient needs, and could adversely impact our financial

These restrictions may lead to decreased patient satisfaction, increased attrition rates, and potential legal challenges if

patients are unable to access needed medications in a timely manner.

Additionally, the inability to offer compounded options may drive

patients who do not have insurance coverage, or who are unwilling to pay out-of-pocket, for branded GLP-1 medications to seek other medications

and/or alternatives outside of telehealth, adversely impacting the growth and viability of the business.

Owned Subsidiary:

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WorkSimpli had over

158,000 active subscriptions as of June 30, 2024.

160,000 active subscriptions as of September 30, 2024.

of Operations

of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

financial results for the three months ended June 30, 2024 are summarized as follows in comparison to the three months ended June 30,

Telehealth revenue,

of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023

financial results for the three months ended September 30, 2024 are summarized as follows in comparison to the three months ended September

September 30, 2024

September 30, 2023

Telehealth revenue, net

WorkSimpli revenue, net

Total revenue, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

cost of revenue

Total cost of revenue

Selling and marketing expenses

General and administrative

General and administrative expenses

Customer service expenses

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Development costs

Total expenses

Operating loss

Interest expense, net

attributable to non-controlling interest

Net loss attributable to LifeMD,

Net loss before income taxes

Income tax expense

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

Preferred stock dividends

Net loss attributable to common

Net loss attributable to common stockholders

$ (5,908,028 )

1 unchanged sentence

revenue, net.

Revenues for the three months ended June 30, 2024 were approximately $50.7 million, an increase of 41% compared to approximately

$35.9 million for the three months ended June 30, 2023.

The increase in revenues was attributable to an increase in telehealth revenue

of 67%, partially offset by a decrease in WorkSimpli revenue of 3%.

Telehealth revenue accounts for 74% of total revenue and has increased

during the three months ended June 30, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced

an increase of approximately $13.4 million during the three months ended June 30, 2024 compared to the three months ended June 30, 2023

and Medifast Collaboration revenue.

WorkSimpli revenue accounts for 26% of total revenue and has decreased slightly year over year due

to a lower demand.

Revenues for the three months ended September 30, 2024 were approximately $53.4 million, an increase of 38% compared to

approximately $38.6 million for the three months ended September 30, 2023.

The increase in revenues was attributable to an increase in

telehealth revenue of 65%, partially offset by a decrease in WorkSimpli revenue of 8%.

Telehealth revenue accounts for 75% of total revenue

and has increased during the three months ended September 30, 2024 due to an increase in online sales demand primarily for LifeMD primary

care which experienced an increase of approximately $18.1 million during the three months ended September 30, 2024 compared to the three

months ended September 30, 2023.

WorkSimpli revenue accounts for 25% of total revenue and has decreased slightly year over year due to

a lower demand.

cost of revenue.

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online platform.

Total cost of revenue increased by approximately 10% to approximately $5.0 million for the three months ended June 30,

2024 compared to approximately $4.5 million for the three months ended June 30, 2023.

The combined cost of revenue increase was due to

increased telehealth sales volume during the three months ended June 30, 2024 when compared to the three months ended June 30, 2023.

Telehealth costs decreased to 12% of associated telehealth revenues experienced during the three months ended June 30, 2024, from 18%

of associated telehealth revenues during the three months ended June 30, 2023 primarily due to improved pricing.

WorkSimpli costs were

4% of associated WorkSimpli revenues for the three months ended June 30, 2024 as compared to 3% of associated WorkSimpli revenues for

the three months ended June 30, 2023.

Gross profit increased by approximately 45% to approximately $45.6 million for the three months ended June 30, 2024 compared

to approximately $31.4 million for the three months ended June 30, 2023, as a result of increased combined sales.

Gross profit as a percentage

of revenues was 90% for the three months ended June 30, 2024 as compared to 87% for the three months ended June 30, 2023.

as a percentage of revenues for telehealth was 88% for the three months ended June 30, 2024 compared to 82% for the three months ended

June 30, 2023, and for WorkSimpli was 96% for the three months ended June 30, 2024 compared to 97% for the three months ended June 30,

The increase in sales volume and demand for LifeMD primary care, Medifast Collaboration revenue, and improved pricing have contributed

to the increase in gross profit.

Operating expenses for the three months ended June 30, 2024 were approximately $51.9 million, as compared to approximately

$36.3 million for the three months ended June 30, 2023.

Total cost of revenue increased by approximately 5% to approximately $5.0 million for the three months ended September

30, 2024 compared to approximately $4.8 million for the three months ended September 30, 2023.

The combined cost of revenue increase

was due to increased telehealth sales volume during the three months ended September 30, 2024 when compared to the three months ended

September 30, 2023.

Telehealth costs decreased to 11% of associated telehealth revenues experienced during the three months ended September

30, 2024, from 18% of associated telehealth revenues during the three months ended September 30, 2023 primarily due to improved pricing.

WorkSimpli costs were 5% of associated WorkSimpli revenues for the three months ended September 30, 2024 as compared to 2% of associated

WorkSimpli revenues for the three months ended September 30, 2023.

Gross profit increased by approximately 43% to approximately $48.4 million for the three months ended September 30, 2024 compared

to approximately $33.8 million for the three months ended September 30, 2023, as a result of increased telehealth revenue and improved

Gross profit as a percentage of revenues was 91% for the three months ended September 30, 2024 as compared to 88% for the three

months ended September 30, 2023.

Gross profit as a percentage of revenues for telehealth was 89% for the three months ended September

30, 2024 compared to 82% for the three months ended September 30, 2023, and for WorkSimpli was 95% for the three months ended September

30, 2024 compared to 98% for the three months ended September 30, 2023.

The increase in sales volume and demand for LifeMD primary care

and improved pricing have contributed to the increase in gross profit.

Operating expenses for the three months ended September 30, 2024 were approximately $53.1 million, as compared to approximately

$38.4 million for the three months ended September 30, 2023.

This represents an increase of approximately 38%, or $14.7 million.

is primarily attributable to:

increase is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the three months ended June 30,

During the three months ended September

30, 2024, the Company had an increase of approximately $6.8 million, or 35% in selling and marketing costs resulting from additional

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and administrative expenses:

During the three months ended June 30, 2024, stock-based compensation was $4.2 million, with the majority

related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense of

$2.9 million for the three months ended June 30, 2023.

During the three months ended September 30, 2024, stock-based compensation was $2.4 million, with the

majority related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense

of $3.3 million for the three months ended September 30, 2023.

This category also consists of merchant processing fees, payroll expenses

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During the three months ended

June 30, 2024, the Company had an increase of approximately $6.4 million in general and administrative expenses, primarily related

September 30, 2024, the Company had an increase of approximately $5.5 million in general and administrative expenses, primarily related

to increases in compensation costs of $3.7 million, merchant processing fees of $1.5 million and legal and professional fees of $1.0

million, partially offset by the decrease in stock-based compensation noted above.

service expenses:

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department located in South Carolina and Puerto Rico.

During the three months ended June 30, 2024, the Company had an increase of

approximately $821 thousand, or 43%, primarily related to increases in infrastructure costs and headcount in the Company’s

During the three months ended September 30, 2024, the Company had an increase

of approximately $698 thousand, or 33%, primarily related to increases in infrastructure costs and headcount in the Company’s

customer service department.

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and bank charges.

During the three months ended June 30, 2024, the Company had an increase of approximately $592 thousand, or 45%,

primarily related to software subscriptions and a reduction in credit card rewards.

This mainly relates to third-party technology services for developing and maintaining

our online platforms.

During the three months ended June 30, 2024, the Company had an increase

of approximately $1.0 million or 74%, primarily resulting from technology platform improvements

and amortization expenses.

During the three months ended September 30, 2024, the Company had an increase of approximately $490 thousand, or

30%, primarily related to software subscriptions.

This mainly relates to third-party technology services for developing and maintaining our online platforms.

During the three

months ended September 30, 2024, the Company had an increase of approximately $1.1 million or 74%, primarily resulting from technology

platform improvements and amortization expenses.

expense, net.

Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by

interest income on the Company’s cash account balances for the three months ended June 30, 2024 and interest expense related to

the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the three months

ended June 30, 2023.

Interest expense, net decreased by approximately $464 thousand during the three months ended June 30, 2024 as compared

to the three months ended June 30, 2023, primarily due to an increase in interest income on the Company’s cash account balances

for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

financial results for the six months ended June 30, 2024 are summarized as follows in comparison to the six months ended June 30, 2023:

Telehealth revenue,

interest income on the Company’s cash account balances for the three months ended September 30, 2024 and interest expense related

to the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the three

months ended September 30, 2023.

Interest expense, net decreased by approximately $155 thousand during the three months ended September

30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in interest income on the Company’s

cash account balances for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

financial results for the nine months ended September 30, 2024 are summarized as follows in comparison to the nine months ended September

September 30, 2024

September 30, 2023

Telehealth revenue, net

$ 108,549,257

WorkSimpli revenue, net

Total revenue, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

cost of revenue

Total cost of revenue

Selling and marketing expenses

General and administrative

General and administrative expenses

Customer service expenses

1 unchanged sentence

Development costs

Total expenses

Operating loss

(17,162,923 )

(12,317,737 )

Interest expense, net

Loss on debt extinguishment

Net loss before income taxes

Income tax expense

(18,963,189 )

attributable to non-controlling interest

Net loss attributable to LifeMD,

(14,616,836 )

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

(18,775,460 )

(16,863,891 )

Preferred stock dividends

Net loss attributable to common

Net loss attributable to common stockholders

$ (21,105,148 )

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revenue, net.

Revenues for the six months ended June 30, 2024 were approximately $94.8 million, an increase of 37% compared to approximately

$69.1 million for the six months ended June 30, 2023.

The increase in revenues was attributable to an increase in telehealth revenue

of 60% and an in WorkSimpli revenue of 0.1%.

Telehealth revenue accounts for 72% of total revenue and has increased during the six months

ended June 30, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced an increase of approximately

$20.7 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 and Medifast Collaboration revenue.

WorkSimpli revenue accounts for 26% of total revenue and has remained steady year over year.

Revenues for the nine months ended September 30, 2024 were approximately $148.2 million, an increase of 38% compared to

approximately $107.7 million for the nine months ended September 30, 2023.

The increase in revenues was attributable to an increase in

telehealth revenue of 62%, partially offset by a decrease in WorkSimpli revenue of 3%.

Telehealth revenue accounts for 73% of total revenue

and has increased during the nine months ended September 30, 2024 due to an increase in online sales demand primarily for LifeMD primary

care which experienced an increase of approximately $38.8 million during the nine months ended September 30, 2024 compared to the nine

months ended September 30, 2023 and Medifast Collaboration revenue.

WorkSimpli revenue accounts for 27% of total revenue and has decreased

slightly year over year due to a lower demand.

cost of revenue.

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online platform.

Total cost of revenue increased by approximately 10% to approximately $9.6 million for the six months ended June 30,

2024 compared to approximately $8.8 million for the six months ended June 30, 2023.

The combined cost of revenue increase was due to

increased telehealth sales volume during the six months ended June 30, 2024 when compared to the six months ended June 30, 2023.

costs decreased to 13% of associated telehealth revenues experienced during the six months ended June 30, 2024, from 19% of associated

telehealth revenues during the six months ended June 30, 2023 primarily due to improved pricing.

WorkSimpli costs were 3% of associated

WorkSimpli revenues for both the six months ended June 30, 2024 and 2023.

Gross profit increased by approximately 41% to approximately $85.2 million for the six months ended June 30, 2024 compared to

approximately $60.3 million for the six months ended June 30, 2023, as a result of increased combined sales.

Gross profit as a percentage

of revenues was 90% for the six months ended June 30, 2024 as compared to 87% for the six months ended June 30, 2023.

Total cost of revenue increased by approximately 8% to approximately $14.6 million for the nine months ended September

30, 2024 compared to approximately $13.5 million for the nine months ended September 30, 2023.

The combined cost of revenue increase

was due to increased telehealth sales volume during the nine months ended September 30, 2024 when compared to the nine months ended September

Telehealth costs decreased to 12% of associated telehealth revenues experienced during the nine months ended September 30,

2024, from 19% of associated telehealth revenues during the nine months ended September 30, 2023 primarily due to improved pricing.

costs increased to 4% of associated WorkSimpli revenues during the nine months ended September 30, 2024, compared to 3% of associated

WorkSimpli revenues for the nine months ended September 30, 2023.

Gross profit increased by approximately 42% to approximately $133.6 million for the nine months ended September 30, 2024 compared

to approximately $94.1 million for the nine months ended September 30, 2023, as a result of increased combined sales.

Gross profit as

a percentage of revenues for telehealth was 87% for the six months ended June 30, 2024 compared to 81% for the six months ended June

30, 2023, and for WorkSimpli was 97% for both the six months ended June 30, 2024 and 2023.

The increase in sales volume and demand for

LifeMD primary care, Medifast Collaboration revenue, and improved pricing have contributed to the increase in gross profit.

Operating expenses for the six months ended June 30, 2024 were approximately $97.7 million, as compared to approximately $68.1

million for the six months ended June 30, 2023.

a percentage of revenues was 90% for the nine months ended September 30, 2024 as compared to 87% for the nine months ended September

Gross profit as a percentage of revenues for telehealth was 88% for the nine months ended September 30, 2024 compared to 81%

for the nine months ended September 30, 2023, and for WorkSimpli was 96% for the nine months ended September 30, 2024 as compared to

98% for the nine months ended September 30, 2023.

The increase in sales volume and demand for LifeMD primary care, Medifast Collaboration

revenue, and improved pricing have contributed to the increase in gross profit.

Operating expenses for the nine months ended September 30, 2024 were approximately $150.7 million, as compared to approximately

$106.5 million for the nine months ended September 30, 2023.

This represents an increase of 42%, or approximately $44.2 million.

The increase is primarily

attributable to:

increase is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the six months ended June 30, 2024,

the Company had an increase of approximately $14.3 million, or 39% in selling and marketing costs resulting from additional sales

and marketing initiatives to drive the current period’s sales growth primarily for LifeMD primary care.

This ramp up is expected

to both increase and maintain sustained revenue growth in future years, based on the Company’s recurring revenue subscription-based

During the nine months ended September

30, 2024, the Company had an increase of approximately $21.1 million, or 38% in selling and marketing costs resulting from additional

sales and marketing initiatives to drive the current period’s sales growth primarily for LifeMD primary care.

is expected to both increase and maintain sustained revenue growth in future years, based on the Company’s recurring revenue

subscription-based sales model.

and administrative expenses:

During the six months ended June 30, 2024, stock-based compensation was $6.7 million, with the majority

related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense of

$5.5 million for the six months ended June 30, 2023.

This category also consists of merchant processing fees, payroll expenses for

corporate employees, taxes and licenses, amortization expense and legal and professional fees.

During the six months ended June 30,

2024, the Company had an increase of approximately $11.1 million in general and administrative expenses, primarily related to increases

in compensation costs of $5.7 million, legal and professional fees of $2.6 million and merchant processing fees of $1.6 million.

During the nine months ended September 30, 2024, stock-based compensation was $9.1 million, with the

majority related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense

of $8.8 million for the nine months ended September 30, 2023.

This category also consists of merchant processing fees, payroll expenses

for corporate employees, taxes and licenses, amortization expense and legal and professional fees.

During the nine months ended September

30, 2024, the Company had an increase of approximately $16.6 million in general and administrative expenses, primarily related to

increases in compensation costs of $9.5 million, legal and professional fees of $3.9 million and merchant processing fees of $2.8

service expenses:

1 unchanged sentence

department located in South Carolina and Puerto Rico.

During the six months ended June 30, 2024, the Company had an increase of approximately

$1.1 million, or 32%, primarily related to increases in infrastructure costs and headcount in the Company’s customer service

During the nine months ended September 30, 2024, the Company had an increase

of approximately $1.8 million, or 33%, primarily related to increases in infrastructure costs and headcount in the Company’s

customer service department.

operating expenses:

1 unchanged sentence

and bank charges.

During the six months ended June 30, 2024, the Company had an increase of approximately $1.2 million, or 39%, primarily

related to software subscriptions and a reduction in credit card rewards.

During the nine months ended September 30, 2024, the Company had an increase of approximately $1.7 million, or

36%, primarily related to software subscriptions and a reduction in credit card rewards.

This mainly relates to third-party technology services for developing and maintaining our online platforms.

During the six

months ended June 30, 2024, the Company had an increase of approximately $1.9 million, or 75%, primarily resulting from technology

During the nine

months ended September 30, 2024, the Company had an increase of approximately $3 million, or 75%, primarily resulting from technology

platform improvements and amortization expenses.

1 unchanged sentence

Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by

interest income on the Company’s cash account balances for the six months ended June 30, 2024 and interest expense related to the

Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the six months ended

June 30, 2023.

Interest expense, net decreased by approximately $251 thousand during the six months ended June 30, 2024 as compared to

the six months ended June 30, 2023, primarily due to an increase in interest income on the Company’s cash account balances for

the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

interest income on the Company’s cash account balances for the nine months ended September 30, 2024 and interest expense related

to the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the nine months

ended September 30, 2023.

Interest expense, net decreased by approximately $406 thousand during the nine months ended September 30, 2024

as compared to the nine months ended September 30, 2023, primarily due to an increase in interest income on the Company’s cash

account balances for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

on debt extinguishment.

The Company recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial

loan during the six months ended June 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan.

loan during the nine months ended September 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan.

September 30, 2024

December 31, 2023

Current assets

2 unchanged sentences

$ (10,295,324 )

capital decreased by approximately $14.4 million during the six months ended June 30, 2024.

capital decreased by approximately $18.1 million during the nine months ended September 30, 2024.

The increase in current assets is primarily

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Current liabilities increased by approximately $24.2 million, which

was primarily attributable to an increase in deferred revenue of $6.3 million as a result of increased recurring telehealth subscription

revenue, an increase in current portion of long-term debt of $6.3 million, and an increase in accounts payable and accrued expenses of

$4.8 million as a result of timing of payments and the Company extending payables and credit terms with vendors.

was primarily attributable to an increase in accounts payable and accrued expenses of $11.9 million as a result of timing of payments

and the Company extending payables and credit terms with vendors, an increase in deferred revenue of $7.6 million as a result of increased

recurring telehealth subscription revenue, and an increase in current portion of long-term debt of $5.3 million.

and Capital Resources

Months Ended June 30,

Net cash provided

by operating activities

Net cash used in investing

Net cash (used in) provided

by financing activities

Nine Months Ended September 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net increase in cash

cash provided by operating activities was approximately $9.7 million for the six months ended June 30, 2024, as compared with approximately

$2.0 million for the six months ended June 30, 2023.

The significant factors contributing to the net cash provided by operating activities

during the six months ended June 30, 2024, include:

(1) $6.7 million in non-cash stock-based compensation charges, (2) an increase in

deferred revenue of $6.3 million, (3) an increase in accounts payable and accrued expenses of $5.4 million and (4) $4.6 million in non-cash

depreciation and amortization.

These increases were partially offset by the Company’s net loss of $13.5 million for the six months

ended June 30, 2024.

Net cash provided by operating activities for the six months ended June 30, 2023, was driven primarily by the following:

(1) $5.5 million in non-cash stock-based compensation charges, (2) $3.2 million in non-cash depreciation and amortization, (3) a net

increase in accounts payable, accrued expenses and other operating activities of $3.1 million, (4) a $325 thousand loss on debt extinguishment

and (5) an increase in deferred revenue of $120 thousand.

These increases were partially offset by the Company’s net loss of $9.3

million for the six months ended June 30, 2023.

cash used in investing activities for the six months ended June 30, 2024 was approximately $5.3 million, as compared with approximately

$4.1 million for the six months ended June 30, 2023.

Net cash used in investing activities for the six months ended June 30, 2024, was

due to cash paid for capitalized software costs of approximately $4.5 million, and cash paid for the purchase of equipment of approximately

$818 thousand.

Net cash used in investing activities for the six months ended June 30, 2023, was due to cash paid for capitalized software

costs of approximately $3.9 million, cash paid for the purchase of intangible assets of $149 thousand and cash paid for the purchase

of equipment of approximately $64 thousand.

cash used in financing activities for the six months ended June 30, 2024 was approximately $1.9 million as compared with approximately

$10.0 million in net cash provided by financing activities for the six months ended June 30, 2023.

cash provided by operating activities was approximately $15.9 million for the nine months ended September 30, 2024, as compared with

approximately $3.1 million for the nine months ended September 30, 2023.

The significant factors contributing to the net cash provided

by operating activities during the nine months ended September 30, 2024, include:

(1) an increase in accounts payable and accrued expenses

of $12.5 million, (2) $9.1 million in non-cash stock-based compensation charges, (3) an increase in deferred revenue of $7.6 million,

and (4) $7.3 million in non-cash depreciation and amortization.

These increases were partially offset by the Company’s net loss

of $19.0 million for the nine months ended September 30, 2024.

Net cash provided by operating activities for the nine months ended September

30, 2023, was driven primarily by the following:

(1) $8.8 million in non-cash stock-based compensation charges, (2) $5.0 million in non-cash

depreciation and amortization, (3) a net increase in accounts payable, accrued expenses and other operating activities of $4.6 million,

(4) a $325 thousand loss on debt extinguishment and (5) an increase in deferred revenue of $692 thousand.

These increases were partially

offset by the Company’s net loss of $14.6 million for the nine months ended September 30, 2023.

cash used in investing activities for the nine months ended September 30, 2024 was approximately $8.8 million, as compared with approximately

$6.5 million for the nine months ended September 30, 2023.

Net cash used in investing activities for the nine months ended September

30, 2024, was due to cash paid for capitalized software costs of approximately $7.5 million, and cash paid for the purchase of equipment

of approximately $1.3 million.

Net cash used in investing activities for the nine months ended September 30, 2023, was due to cash paid

for capitalized software costs of approximately $6.3 million, cash paid for the purchase of intangible assets of $149 thousand and cash

paid for the purchase of equipment of approximately $94 thousand.

cash used in financing activities for the nine months ended September 30, 2024 was approximately $2.7 million as compared with approximately

$14.7 million in net cash provided by financing activities for the nine months ended September 30, 2023.

Net cash used in financing activities

for the six months ended June 30, 2024, consisted of:

for the nine months ended September 30, 2024, consisted of:

(1) preferred stock dividends of $2.3 million, (2) repayments of notes payable

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options of approximately $108 thousand.

Net cash provided by financing activities for the six months ended June 30, 2023, consisted of:

(1) $14.5 million in net proceeds received from the Avenue Facility and (2) $2.0 million in proceeds received from the CRG Financial

These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of

approximately $4.4 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of

approximately $1.6 million, payments made to redeem 500 WorkSimpli membership interest units of approximately $307 thousand, contingent

consideration payments made related to the ResumeBuild brand acquisition of approximately $125 thousand and distributions to non-controlling

interest of $72 thousand.

Net cash provided by financing activities for the nine months ended September 30, 2023, consisted

(1) $19.5 million in net proceeds received from the Avenue Facility, (2) $2.3 million in proceeds received from notes payable and

(3) $900 thousand in net proceeds received for the sale of common stock under the ATM Sales Agreement (as defined below).

These factors

contributing to net cash provided by financing activities were partially offset by repayments of notes payable of approximately $5 million

net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of approximately $2.3 million,

payments made to redeem 500 WorkSimpli membership interest units of approximately $306 thousand, contingent consideration payments made

related to the ResumeBuild brand acquisition of approximately $188 thousand and distributions to non-controlling interest of $108 thousand.

and Capital Resources Outlook

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operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was paid during

the three months ended March 31, 2024, and the remainder $2.5 million was paid during the three months ended June 30, 2024.

the three months ended March 31, 2024, and the remaining $2.5 million was paid during the three months ended June 30, 2024.

addition, in connection with the Medifast Collaboration, on December 11, 2023, the Company entered into a stock purchase agreement with

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The Avenue Facility matures on October 1, 2026.

The Company issued Avenue warrants

to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments.

In addition, Avenue

may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any

time while the loans are outstanding, at a price per share equal to $1.49.

Proceeds from the Avenue Facility were used to repay

the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.

The Company issued Avenue warrants to purchase

$1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments.

In addition, Avenue may convert

up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while

the loans are outstanding, at a price per share equal to $1.49.

Proceeds from the Avenue Facility were used to repay the Company’s

outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.

November 15, 2023, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s

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common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement.

As of June 30, 2024, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available

under the 2024 Shelf.

As of September 30, 2024, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million

available under the 2024 Shelf.

Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included

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efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months and positive operating cash

flows during the six months ended June 30, 2024, (3) cash on hand of $35.7 million as of June 30, 2024, (4) $53.3 million available under

the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf, (5) management’s ability to curtail

expenses, if necessary, and (6) the overall market value of the telehealth industry, which it believes will continue to drive interest

in the Company already evidenced by the Medifast Collaboration and Medifast Private Placement noted above.

flows during the nine months ended September 30, 2024, (3) cash on hand of $37.6 million as of September 30, 2024, (4) $53.3 million

available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf, (5) management’s ability

to curtail expenses, if necessary, and (6) the overall market value of the telehealth industry, which it believes will continue to drive

interest in the Company already evidenced by the Medifast Collaboration and Medifast Private Placement noted above.

Accounting Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis